An internal controls software can be necessary for businesses with large budgets and high internal spending. It is vital to track and continuously monitor internal spending, as failure to do so could result in cases of internal fraud. To illustrate the need for an internal controls systems, we wanted to take a look at the success of one of our clients in implementing a monitoring program.
Reasons for Implementing an Internal Controls Software
With revenues exceeding USD $10 billion, a petroleum and natural gas exploration and production company couldn’t afford to have even small breaches in their internal controls. The organization, however, lacked an internal controls software system to track policy breaches and to automatically monitor all of the data and transactions from a variety of departments, including accounts payable (AP) and vendor management, in real-time.
Although the company had moved from a manual solution to an AP workflow several years ago, a significant amount of manual work was still required. Adding to the problem, the employees managing the AP workflow were coders who weren’t properly trained to handle this task. Information was frequently missing, expenses not within limits were being approved, and information wasn’t being tracked properly.
The Solution
To meet the requirements of getting to the root of their internal controls issues and monitoring their financial transactions in real-time, the energy company turned to Alessa. The continuous controls monitoring platform was configured to identify potential areas of revenue leakage, strengthen internal controls and find opportunities to increase compliance.
After conducting a risk and controls assessment based on two years of data, the solution identified four key areas of risk within the organization: accounts payable, audit automation, purchase card, and vendor management.
The Benefits
After identifying these departments as areas of high risk for the company, and using advanced analytics, Alessa revealed the following:
Accounts Payable
- More than $614 million in discounts that had not been applied by 6,534 vendors despite agreed-upon payment terms and avenues for recourse
- More than $1.2 million in approved payments that exceeded approval limits
- More than $144 million in duplicate invoices from the same vendor
- More than $3 million in duplicate invoices from multiple vendors for the same job, which occurred within two days (before or after) of the service date with a 5% variance in invoice amount
- More than $66.5 million in payments that were approved and processed on 754 inactive wells
Purchase Card
- Almost 10,000 transactions involving more than $1.6 million were flagged as being potential personal purchases
Vendor Management
- Over 2,000 duplicate vendors identified based on same vendor name and/or vendor address
- Almost 400 matches between an employee and vendor bank account
- 80 employees that have a potential address match with vendors based on street and city
Results
Building on these dramatic results, the company now plans to expand the use of Alessa to other key business processes such as payroll, manual reporting processes and others to ensure all transactions are compliant with organizational policies.
Software Solutions for Your Business
In addition to our continuous controls monitoring software solution, Alessa provides software for AML compliance and fraud detection and prevention for a variety of financial institutions. To learn more about how our internal controls software and other products can help your organization contact us today, or get a free demo below.
